A new tax reverse charge may change the way you account for VAT. As of 1 October 2020, a new domestic VAT reverse charge will take effect in order to reduce the prospect of trader fraud.
Specified services (similar to those under the Construction Industry Scheme (CIS) and materials that are treated as part of the supply of construction services during construction will be subject to the new reverse charge which sees responsibility transfer from the sub-contractor onto the contractor for accounting to HMRC for value added tax. However, there are some services that will be exempt.
Importantly, the new reverse charge carries some risks that need to be considered, such as cash flow impacts, project restructuring, administration issues for invoicing and payments, and risk management. It’s worth noting that while the change will affect all specified services and materials from 1 October 2020, this also includes those provided under pre-existing contracts.
Sound complicated? It is. You need to ensure you’re prepared in advance of this change; we can help you do that.
Take a look at insights from our experts below.
Preparing for the new VAT reverse charge
The new VAT reverse charge – the essentials you need to know
New rules are being introduced regarding the payment of VAT for certain businesses in a construction supply chain. Understand the essentials and how you can start p…
The new VAT reverse charge - does it affect me?
Construction companies should note which of their services will be affected by the new VAT rules that take effect from 1 October 2020.
The new VAT reverse charge – what to do now to prepare
A guide to the practical implications of the VAT reverse charge and the early preparations that can be made in advance of its implementation on 1 October 2020.